Coca-Cola HBC on Thursday reported a 3.4% revenue decline for the first-half of 2016 to €3.04bn ($3.4bn) down from €3.2bn recorded in the first-half of 2015. The company blamed adverse currency conditions for the drop. On a neutral currency basis, revenue would have risen 2.4%.
The bottler of Coca-Cola products in 28 countries including Nigeria said that cost of goods sold decreased 4.7% to €1.9bn, from €2bn due to favourable sugar prices and lower cost of PET resins, which was driven by the lower oil prices.
Even with the decrease in cost of goods sold, gross profit fell marginally by 1.1% to €1.1bn, down from €1.2bn.
The coke bottler said that it sold higher priced drinks despite the currency volatility. The company saw a 0.1% volume lift driven by Nigeria, Romania and Serbia. It noted that volumes grew 3.5% in its developing markets but fell 2.8% in established market segment. Emerging markets which include Armenia, Belarus, Bosnia and Herzegovina, Ukraine, Russia and Nigeria, among others saw a 0.5% volume lift.
CCHBC said volumes “held up well” in July making it confident of “volume growth for the year as a whole”.
“We do forecast an improvement (in the back-half), chief executive Dimitris Lois said. “The improvement reflects one more selling day and additional initiatives we have focusing on very strong marketing calendars.”
The company said it was also bringing forward some planned restructuring initiatives from 2017 into 2016, primarily in emerging markets like Russia and Nigeria. It said it plans to spend €48m this year instead of €35m initially earmarked so it can more quickly realize gains from the operational efficiencies.
Lois said it expects volumes in emerging markets like Nigeria to rise despite currency headwinds. After a muted growth in the second-half, he said conditions in the country should improve. He is forecasting sales rise to the mid-to high-single-digit for the full year.
Coca-Cola HBC posted an impressive 11.8% net profit in the first-half, rising from €125.2m to €140.0m.